First to Use Is Not Always First to Win: What Trademark Law Teaches Us
Your brand is one of the most important parts of your business. The name you choose, the logo you design, and the reputation you build all shape how customers see you. Many business owners assume that trademark rights only begin once paperwork is filed with the government. However, trademark rights can arise long before any registration takes place. Understanding how these rights work can help protect your business from costly problems later.
Common Law Rights: What They Are and Why They Matter
Under United States trademark law, simply using a name or logo in commerce automatically creates common law trademark rights. These rights come from court decisions rather than registration with the United States Patent and Trademark Office.
As a result:
You gain some rights just by using your trademark;
You can stop others from using a similar trademark in your local area; and
You do not need to register the trademark to claim these rights.
However, common law rights are limited to the specific geographic area where you use the trademark. If your bakery uses the name “Sweet Star” only in Arizona, then your rights are limited to Arizona. A bakery in Maine could use the same name without violating your rights unless it expands into your territory. The geographic distinction matters because many businesses plan to grow beyond their starting point. Expansion across states, or even a growing online presence, can create conflict if someone else uses or registers your trademark first. Being the earliest user does not automatically give you nationwide protection.
Why Federal Registration Is Still Important
Even though common law rights arise through actual use in commerce, federal registration under the Lanham Act provides much stronger and broader protection. A federal trademark registration provides the trademark owner with:
Nationwide presumptions of ownership;
Public notice of the trademark, which discourages others from adopting similar trademarks;
Stronger enforcement tools in court;
A path toward incontestable rights after five years; and
Priority across the entire country, with limited exceptions for earlier local users
Registration is especially important for businesses that plan to grow nationwide. It protects not just where you are today, but where you hope to operate in the future.
A Real Example: Burger King v. Hoots
The conflict between the national Burger King brand and a small Illinois family restaurant shows how these principles work in practice. Gene and Betty Hoots opened a restaurant called Burger King in Mattoon, Illinois in 1957. They registered their name under Illinois state law in 1959. At the same time, Burger King Corporation was already operating in Florida and expanding into new states. When Burger King Corporation entered Illinois in 1961 and secured a federal registration, a dispute began over who could legally use the name. The court balanced two rules:
The Hoots were the first to use the name in their region, which gave them common law rights in that local area; and
Burger King Corporation had federal rights everywhere except in the specific territory the Hoots had already occupied.
The court drew a boundary. The Hoots could keep using the Burger King name within a 20-mile radius of Mattoon. The Burger King Corporation owned the rights everywhere else in the state. That boundary still exists today, and the closest fast-food Burger King remains about 25 miles outside Mattoon.
What This Means for Your Business
The lesson for business owners is simple. Being the first to use a name gives you rights, but those rights are limited. They do not guarantee that you can expand. They do not prevent others from registering the name nationally. They do not shield you from future conflicts. If you want the freedom to grow, operate across state lines, protect your brand more effectively, and avoid expensive legal disputes, federal trademark registration is an essential step. Common law rights protect where your business has been. Federal registration protects where your business is going.
Sources:
Adrian Naves, Illinois – Home of The Original Burger King, Classic Chicago Magazine, Dec. 9,
2023, https://classicchicagomagazine.com/illinois-home-of-the-original-burger-king/.
Burger King of Florida, Inc. v. Hoots, 403 F.2d 904 (7th Cir. 1968)
COMMON LAW TRADEMARK RIGHTS, BIT LAW,
https://www.bitlaw.com/trademark/common.html.
